DES Newsletter Fall 2013

Table of Contents DES Upcoming Events DES Upcoming Events

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Alumni Profile

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Faculty & Student Spot- P.3 lights DES 2013 Initiatives: Tutoring & Mentoring Programs

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Regional Economy

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National Economy

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International Economy

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Special Topic: Emerging Economies

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DES Past Events

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CONTACT US Website: www.drexeleconomicssociety.com

Facebook: www.facebook.com/ Email: drexeleconomics@gmail.com

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FALL 2013 GENERAL BODY MEETING, Thurs 10/3 8pm Join the DES board to hear about fall's upcoming events, learn more about the first annual research competition, tutoring and mentoring programs and find out how you can be involved with the DES for the 2013-2014 academic year.

Dr. Michael Lahr from the Edward J. Bloustein School of Planning and Public Policy (Rutgers University) and Dr. Scott Knowles (Drexel University) will discuss the political climate and economic implications of natural disasters.

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DrexelEconomicsSociety

Join us for light appetizers with the Economics professors, career development, co-op, and study abroad staff members. Get to know the DES board members and learn about what Drexel has to offer you over your coming years!

THE POLITICAL ECONOMY OF NATURAL DISASTERS, Tues 10/22 6-7:30pm

Economic News

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DES ANNUAL MEET AND GREET, Fri 9/27 5-7pm

SOCIAL ENTREPRENEURSHIP IN THE PHILADELPHIA ECONOMY, TBD A social entrepreneur identifies and solves social problems on a large scale. Just as business entrepreneurs create and transform whole industries, social entrepreneurs act as the change agents for society, seizing opportunities others miss in order to improve systems, invent and disseminate new approaches and advance sustainable solutions that create social value. Thanks to a $1 million award, the Philadelphia Social Enterprise Partnership, an incubator for socially-minded startups, is going to become a reality. This panel will discuss how social entrepreneurship can innovate ways to solve local problems in the Philadelphia region.

RESEARCH 101: DESIGN AND METHODS, 3 Sessions 11/5 4-5p; Maria Olivero, PhD and Matthew Weinberg, PhD 11/6 1-2p; Maria Olivero, PhD 11/7 6-7p; Marco Airaudo, PhD and Anne Duchene, PhD Interested in learning more about conducting rigorous economic research? Want to know more about the research our faculty are working on? Join us for a one hour seminar on the basics of economics research, both theoretical and empirical for microeconomic and macroeconomic research. *Students planning to compete in the DES Research Competition are strongly encouraged to attend at least one of these sessions.

FOOD ECONOMICS, Fri 11/15 10:00a-3:00p

Alumni Profile Gregory in den Berken Greg in den Berken graduated with honors from Drexel University in 2012 with a B.S. in Economics. While at Drexel, Greg was a member of the Drexel Economics Society and president of the Pre-Law Society. He was inducted into the international economics honor society Omicron Delta Epsilon prior to graduation. Greg is currently a first-year law student at the University of Michigan.

Gregory in den Berken

Originally a Business Administration major, Greg switched to Economics during his co-op with BlackRock, an investment management firm. At BlackRock, Greg worked on projects related to the company's acquisition of Barclays Global Investors. His second co-op was with the law firm Morgan, Lewis & Bockius LLP. Greg wrote his senior seminar paper on regulatory issues in the economics of the domestic airline industry, and credits his economics courses for steering him toward the legal field.

Anna Petrone Anna Petrone,economics and math double major and physics minor,landed herself a position in the Federal Reserve’s two-year research assistant program within its Macroeconomic and Quantitative Studies section. Petrone was attracted to economics because of its practicality. “I was drawn to econ for its relevance and because every day,problems arise that constantly challenge and develop the theory itself,” she says. “As a math major,view economics as a highly applied area of study,is why I like it so much.”

Petrone said Drexel’s co-op program allowed Petrone to find a job and her classes helped lay the framework for success during her co-ops. She is proficient at analytical skills and programming languages such as SQL, SAS, C++, Python, Mathlab and a few others. Also, she shows great gratefulness to Dr. Laincz, her ECON 902 professor, who encouraged her to apply for the Fed’s Board.

Anna Petrone

Petrone now works in a department that is part of the Economics and Research division of the Fed’s Board of Governors. In addition, she has started taking some classes at the University of Maryland, and in a year or two she hopes to be accepted to their masters program in Applied Math.

Nedko Yordanov Nedko is a class of 2011 alumnus, graduated with B.S. in Economics and B.S. in mathematics.

Throughout his studies at Drexel University LeBow College of Business, he earned numerous recognitions, including the R. John Chapel scholarship, The Robert Hamman Award for excellence in microeconomic theory, and the Excellence in Macroeconomic Theory Award.

Moreover, he was among the initiators for establishing a Drexel University chapter of Omicron Delta Epsilon - The International Economics Honor Society, and was one of the first students inducted in the society.

Nedko Yordanov

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Following his graduation from Drexel University, Nedko enrolled in the Ph.D. program at the University of Arizona. There he has concentrated his efforts on teaching and research in the fields of Industrial Organization and Economics of Information. His current work focuses on the dynamics in the mobile applications markets.

Faculty and Student Spotlights Faculty Updates 

In January of 2014, the Department of Economics will welcome a new member of the faculty, Dr Andre Kurmann, as an Associate Professor.

Professor Kurmann is currently an economist at the Monetary Studies section of the Board of Governors of the Federal Reserve System in Washington, DC. Before joining the Fed, Professor Kurmann was a visiting associate professor at the Wharton School of the University of Pennsylvania (from 2008 to 2011) and an Assistant and Associate Professor at the Université du Québec à Montréal (from 2002 to 2011). Dr Kurmann holds a BA in Economics from HEC Lausanne (1998), an MA and a PhD in Economics from the University of Virginia (2000 and 2002). His research focuses on understanding the determination of the term structure of interest rates and labor and capital market frictions. He has published extensively in top-tier academic journals including the Journal of Monetary Economics, the Review of Economic Dynamics and the Journal of Economic Dynamics and Control, among others.

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Prof Teresa Harrison has accepted a one-year appointment beginning September 1st as Associate Dean for Academic Affairs, overseeing curriculum, learning assessment and the Center for Teaching Excellence.

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Dr Yoto Yotov has been granted tenure and promoted to Associate Professor starting in September of this year.

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Dr Richard Barnett has been promoted to Clinical Professor starting in September of this year.

Dr. Andre Kurmann

Prof. Teresa Harrison

School of Economics Updates To celebrate the inauguration of the School of Economics, we will have two public lectures by Preston McAfee (Director for Google Strategic Technologies and previous Chief Economist, VP and Research Fellow for Yahoo! Research www.mcafee.cc ) and Peter Henry (Dean of the Stern School of Business of NYU, William Berkley Professor of Economics and Finance and Richard West Professor of Business www.stern.nyu.edu/faculty/bio/peterhenry).

Dr. Yoto Yotov

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The School of Economics will also host a series of academic seminars by distinguished economists which will be announced in the school website as soon as the dates are finalized.

DES 2013 Initiatives: Tutoring and Mentoring Programs Mentoring HEY FRESHMEN: Want to get a head start on figuring out your time at Drexel as an econ major? Have questions that you're not sure who can answer? Looking for some advice on classes, time management, student activities, and some Drexel basics? Sign up for an Economics Mentor sponsored by the Drexel Economics Society (DES)!

DES would like to help you navigate your transition to college life and help you succeed in the econ program! By signing up for our free mentorship program, you will have access to an upperclassman who will serve as a mentor and friend during your freshman year.

We really hope you take advantage of this resource. If you're interested in having a mentor, please reply to us at info@drexeleconomicssociety.com Welcome to the Econ community!

Tutoring Struggling with your economics courses? DES provides tutoring services for all econ courses. Students in the program can work with a tutor one-on-one or in group settings FOR FREE! Work with students that have excelled in upper level economics and math’s toughest courses.

For more information, visit our website @ drexeleconomicssociety.com or email us at info@drexeleconomicssociety.com!

Regional Economy The Fed's Latest Beige Book: "Philadelphia Business Activity Continues at Moderate Pace" The Federal Reserve Board released its Beige Book of the Third District on September 4, 2013. Findings showed moderate rates of growth has continued for general services, existing home sales, and home construction from the previous period. The report survey found not only greater confidence in the U.S. economy and in global conditions, but also caution in their hiring and long-term capital expenditure plan, as well as concerns about a potential fiscal crisis. Below is a summary of the report of the economic conditions of five sectors within the region of the Third District, including eastern Pennsylvania, southern New Jersey, and Delaware: Third District manufacturing reported further increases from the previous Beige Book in addition to growing optimism among manufacturing companies that business conditions would improve. Third District retail reported modest growth overall since the previous period. Auto dealers reported strong sales growth in this summer (July and the beginning of August). Mall retailers and dealers both remained very optimistic about the Fall. Third District financial firms continued to report modest increases in total loan volume. The credit quality of their loan portfolios was also healthier from previous. Philadelphia real estate and construction remained busy with existing projects from spring sales but experienced a lull in early August, partially due to higher interest rates. Market analysts reported expansion in commercial space in addition to an increase in commercial interest with branches opening in Philadelphia Area market. Contacts remained "generally optimistic for slow, steady growth." Third District service-sector firms experienced a slow start in the summer but continued to report a moderate pace of growth in general. Tourists continued to spend cautiously throughout the district. Price levels continued to increase slightly and there were few wage pressures according to most firms, including staffing companies.

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National Economy

By Douglas Hammond The aggregate perception or outlook of US economy dictates the market, so what we believe is the health of our current economy, is our economy.

Case in point, the industries adding the most jobs in July are retail trade, which added 47,000 jobs, and food services and drinking places within leisure and hospitality, which gained 38,000. Not only is discretionary spending increasing in these luxury and leisure sectors, but we see overall demand increasing. The Supplier Deliveries Index, part of the July 2013 NonManufacturing ISM Report on Business, showed a one-percentage point change from June. This means supplier deliveries are slowing at a faster rate, indicating suppliers are not able to keep up with the increasing demand. Furthermore, the Advance Monthly Sales for Retail and Food Services Report from the Census Bureau told us on August 13th that retail sales are still relatively healthy. However, as consumers are spending, it seems suppliers are wary. The Business Inventories Report also released on the 13th explained how businesses have kept their inventories flat with June even though sales increased. This discrepancy between the two groups epitomizes our post recession recovery.

The next year or two will continue slow growth, of course discounting the various smaller business cycles that occur on a quarterly and bi-quarterly basis. In two years time, we will see another dip in our economy, of course not a severe as the great recession. This would fit the trend that can be observed from the civilian unemployment rate. The Bureau of Labor Statistics' Employment situation released the first week in August showed us that unemployment is decreasing, but seems to be so at a slower rate. The unemployment rate edged down to 7.4 percent as total nonfarm payroll employment increased by 162,000 in July.

It is expected that US economy will not have a huge down spiral, but will not experience a boom either. More small fluctuations and a slow growing economy will continue in the near future.

International Economy

By My Duong Global economy is continuing to grow slowly due to the deceleration in Chinese economy, the positive economic activity yet highly volatile financial environment in Japan, the anemic economic expansion in the US, and the slow out-of- recession improvement in Europe.

CHINA Chinese economy is losing its strength, which is reflected in slowdown in economic activity. According to Markit Economics, the purchasing managers’ index (PMI) for the manufacturing sector declined from 49.2 in May to 48.2 in June, indicating deterioration in activity (note that a PMI below 50 reflects a decline in activity, while a PMI above 50 reflects a growth). This was resulted from a decrease in new orders, especially in export orders. On the other hand, PMI for the services sector increased from 51.2 in May to 51.3 in June, indicating an increase in activity, but this growth was at a modest pace. This faltering result in economic activity reflects the low overseas demand, especially from Europe, and a decrease in domestic investments. Due to the increase in money supply, credit is growing rapidly, but not resulting in economic growth, and thus creating risks to the economy. In the 1st quarter of 2013, while credit grew at 58%, real GDP grew modestly at 7%.

JAPAN In June, the PMI for the manufacturing sector reached 52.3, the highest level in 2.5 years, mostly due to increase in new orders. Other good signs included increases in retail sales, industrial production, and shipments of capital goods; decrease in inventory-sales ratio; and stabilization in consumer prices. Japanese executives are confident about the fruits of their economic policy. Consumer confidence also rises and job markets have improved. Worker bonuses are going up, resulting in more demand for large expenditures. Also, national sales tax is up to pay for the rising cost of pensions and healthcare, improving Japan’s fiscal position.

On the other hand, Japanese financial market is facing volatility mainly because of the increase in government’s purchase of bonds and expected inflation in Japanese yen, thus raises concerns over adjusting policy to fix problems.

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EUROPE The Eurozone is now recovering its economic status. However, the unfavorable movements of private consumption, government expenditure and investment activity have slowed down the progress. Specifically, private consumption declines due to household deleveraging and falling disposable income. Governments are reluctant to increase expenditure to focus on repairing their balance sheets after the crisis and preventing higher deficits. In addition, investment activity has been very low.

Since the crisis in 2009, the Eurozone’s exports have been growing significantly at 7.9% on average from 2010 to 2013 (Eurostat). According to EU Commission, trade balance has reached € 196 billion in 2013. The Eurozone tends to expand its export area to countries outside its territory, resulting in a growth gap with faster growth in extra-Eurozone exports. There appear new export destinations. Especially, exports to emerging markets such as BRIC countries (Brazil, Russia, India, China) has increased significantly.

Special Topic: Emerging Economies

By Paul de Vassal While the United States economy struggles along, mired by political squabbles and an anemic recovery following the recent crisis, worldwide growth has been carried forward by developing countries. Emerging Economies for the last decade or so, at least since 2005 when Goldman Sachs bestowed the acronym BRIC on them, have been led by Brazil, Russia, India, and China. Last year the four of them accounted for a quarter of worldwide growth. By the end of the decade, that number should rise to one third.

As China, who makes up most of the BRIC growth, slows from double digit, to merely robust 7% or 8% growth, the rest of the world is left asking: Where will growth come from in the future? How are we to escape the ills of stagnation and the zero sum game? Etc. Some analysts allude to the projection that the United States is approaching what could be an explosive period of dynamic growth. Aided by an energy revolution, and stagnation elsewhere, the US could be the forerunner in coming years.

Economic inequality has historically been characterized, at least generally, as usually occurring along East-West, or NorthSouth lines. With the former coming to a close, many of the new emerging economies now exist in the South. These countries, in Africa, South America, and South Asia, are likely to be the bulwarks of future growth. Standing in the way of their development is the two immense challenges of unstable and despotic political institutions, and a lack of any real infrastructure. If those two ills could be cured, whether slowly by the unraveling of blockades to free markets and enterprise, or more quickly by reforms, the world could be on the brink of, not a decades long slog to overpopulation, pollution, and poverty (think Elysium), but centuries of technological growth, rising living standards, and exploration (perhaps to other worlds).

DES Past Events Trip to Washington

Coop and Study Abroad Info Session for Economic Students 6

References and citations are available on DES website at www.drexeleconomicssociety.com

“War on Poverty” Panel Discussion